Walmart Is Getting Re-energized To Take On Netflix

Over the years, numerous reports have anticipated Walmart moving into the video rental business with the goal of supplanting the current leader at the time. Now, according to a report by The Information website, the retail giant is considering another shot at the business with a subscription service that will allow members to view movies and television shows at a price below $8 a month.

The new service is reportedly being designed to take on Netflix, which offers plans between $8 and $14 a month, and Amazon.com, with its Prime Video service for $8.99 monthly. Other companies, including Apple, Disney and Hulu, also compete in the space.

In an online discussion last week, some members of the RetailWire BrainTrust were enthusiastic about the Walmart's prospects.

"I just love the fact that Walmart isn’t taking the Amazon juggernaut sitting down," wrote Lee Peterson, EVP of brand, strategy and design at WD Partners. "America’s most competitive retailer by far."

Walmart owns Vudu, an online platform where consumers can rent or buy movies and TV shows on an individual or bundle basis. The platform also offers some free, ad-supported programming, as well. Walmart began integrating Vudu on walmart.com in 2011.

Drilling down into how Walmart could differentiate itself in the space, however, some BrainTrust members weren't convinced.

"There are more than a dozen easy-access streaming services," wrote Professor Gene Detroyer. "People choose one over another because of the programming (though multiple services often offer the same TV and movies). Or because of a legacy connection — Netflix because they have been using it for years or Amazon because one is a Prime member. How will Walmart’s service break into this competitive landscape?"

Walmart plans to target its content to middle America, an audience management believes has been largely ignored by others, according to anonymous sources who spoke with The Information. As with Netflix, Amazon, etc., Walmart is prepared to invest in original content and give subscribers reasons to pay for the service in addition to or in place of the others.

"Walmart should focus on beating Amazon where they can. For a retailer with a heavy physical footprint, how many wars can they find themselves in a position to win?" wrote Ray Riley, CEO of Progress Retail, on RetailWire. "Battling against Netflix with 100 million plus subscribers (which excludes the rest of the world utilizing a friend or relative’s account) as well as Prime Video seems untenable."

"Is there anything new that Walmart can bring to the streaming video market?" wrote Adrian Weidmann, principal at StoreStream Metrics. "I think not. While Walmart may be able to skim some business away from Amazon, Netflix and others, I don’t see that this service brings any more value to their brand."

The retailer hasn’t been shy about making investments in recent years — note the acquisitions of Jet.com, Bonobos, ModCloth, Moosejaw and other e-tailers operating in the U.S. and abroad.

While Walmart did not respond to the most recent reports, capturing share of the video market has been a goal of various management teams at the retailer going back to at least 2002. Back then, the retailer began testing an online DVD rental service to compete with Netflix (founded in 1997) and Blockbuster (there’s one U.S. store left in Bend, OR), only to eventually discontinue the program.

Despite much criticism, some on RetailWire's BrainTrust saw Walmart's attempt to move into the space as not only sound, but potentially opening new strategic avenues.

"Why wouldn’t Walmart make an attempt to capture a slice of the streaming content market?" wrote James Tenser, principal at VSN Strategies. "The cost of digital goods approaches zero at large volumes. There are some interesting co-advertising possibilities with Walmart suppliers and its private label brands that other existing channels could not execute."

RetailWire is the premier online forum for the retailing industry. Each business morning, RetailWire editors pick news topics worthy of commentary by its "BrainTrust" of industry experts and the RetailWire membership. The results are virtual round tables of opinion and advi...